Cricut can be used to cut fabric. In order to cut fabric with your Cricut, you will need the following: Steam A Seam 2 (a double stick fusible web), blue painters tape, iron, and the Cricut with cartridge.
Choose fabric. You can use Cricut fabric swatches or your own. Cut the fabric to the size you need: approximately 4 inches. Cut the Steam A Seam and attach it to your fabric, using an iron to make it adhere. Feed the fabric in your Cricut fabric side down. You may need to adjust the pressure on the blade. Six might be a good place to start with your fabric. You'll have to judge that based on your fabric and blades. Tap your fabric down with painter's tape, before you feed it through.
These cut-outs can be used to embellish any fabric: Onesies, children's clothing, pillows, etc. Just iron them on.